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Colonial Cases

Rothwell v. Parkin, 1880

[enforcement of judgments]

Rothwell v. Parkin

United States Consular Court, Foochow
De Lano, 15 May 1880
Source: The North China Herald, 25 May 1880




Foochow, 15th May, 1880.

Before M. M. DE LANO, Esq., Consul, sitting as Judge, and THEO. F. JONES and DAVID W. CHANDLER, Associates.


   The Court today delivered judgment in the above case as follows:-

   This suit is brought upon the petition of Thomas Rothwell - a British subject residing in Shanghai - to effect recovery upon a judgment obtained by him in the month of February of last year, in the Court of the United States Consulate at Shanghai, an execution having been issued from the court and returned as unsatisfied.

    The petition sets forth as follows:-

     That on the 3rd day of February, 1879, at Shanghai, in the Empire of China, in the United States court for the Consular District of Shanghai, before David H. Bailey, Esq., Consul-General and Judge of the court, the plaintiff recovered a judgment which was duly delivered by said Court, against the defendants for breach of contract at Shanghai, for the sum of two thousand four hundred and fifty and 58/100 dollars, Mexican, besides the costs of action amounting to fifty-five and 60/100 dollars, Mexican; that no part of said judgment or costs has been paid, and no property of the defendants can be found in the Consular District of Shanghai.

   That plaintiff is informed and believed that defendants are owners of certain estates in land and houses situated at Foochow.  The defendants have attempted and are attempting to transfer, or have transferred to one H. Olmsted of the State of New York or New Jersey, their said lands and houses in Foochow aforesaid, under and by virtue of a pretended assignment of the same in pursuance of the laws of the State of New York, and in fraud of the plaintiff, and for the purpose of preventing him from having the said judgment satisfied.

   That there is great danger of the defendants removing or disposing of their property, whereby plaintiff will lose his claim; wherefore plaintiff prays that judgment may be given by this Honourable Court against defendants in favour of plain tiff for the sum of two thousand five hundred and six dollars and eighteen cents and the costs of this action.

   Plaintiff further prays that the aforesaid lands and houses or other [property, real or personal, of the defendants within the jurisdiction of this Court, sufficient to satisfy said judgment, may be forthwith attached and held to secure the same.

   Upon the filing of the said petition, together with affidavit on non-residence of defendants, and an attachment bond, a writ of attachment was issued from this court against certain property lately in possession of the defendants, in pursuance of a £"Decree of Attachment," which has the force of law in the united States Consular Courts in China, the ground of his application being, in substance, that defendants had attempted or were attempting to transfer said property by a pretended Deed of Assignment to one H. Olmsted.

   The defendants in their Answer admit that they were indebted to the plain tiff, and that a judgment was obtained in the United States Consular Court at Shanghai, but they dispute the grounds upon which it was based.  They admit that three-eighths of the property attached by order of this Court was until the making of a deed of Assignment of the same, the property of two of the defendants, but allege that by a Deed of Assignment duly recorded in the office of the Clerk of the county of New York, and bearing date the seventh day of December, 1878, and made between all the defendants, of the first part, and Henry M. Olmstead of the State of New Jersey in the United States of America, of the second part, all their right, title, and interest in and to this said property, as well as all their other property and interests situated in the Empire of China, were conveyed to the said Henry M. Olmsted, in trust, for the benefit of their creditors.  A certified copy of the said Deed of Assignment appears in the evidence.

   The testimony of Mr. Pim is in substance as follows:-

   That he was, at the date of the assignment and for some time previously, a partner in the firm of Olyphant & Co. (but a British subject), and that the [property now under attachment by an order of this Court, was at the date of the assignment to Olmsted the property of the firm; that previous to the registration of the Deed of Assignment, it stood registered in the firm name of Olyphant & Co., in the records of the United States Consulate; that the title papers (deeds of perpetual lease) were executed to Olyphant & Co., and that the title papers, as well as the property itself, were in the possession of the firm.

   That the late firm could have conveyed the property, and had they done so, they would have given a deed of transfer in the usual way, signing thereto the firm name of Olyphant & Co.  That he, on a former occasion, sold property of the firm here, signing the firm name to the deed of transfer.  He was not a partner then, but was authorized to sign the firm.  That the property represented nine thousand dollars or more of the firm's assets, and appeared in the firm's books in Real Estate account; that if sale had been made of it before the assignment, the amount realized for it would have been placed to the credit of Real Estate account and cash debited.

   The legal title to the property seems therefore to have been in Olyphant & Co. previous to the assignment, and if a legal transfer was effected by the act of assignment, it is now the property of the assignee, and no other title as opposed to such legal one can found an action, actio in rem.

      Besides relying upon the testimony of Mr. Pim that Olyphant & Co. were the owners of the property, it seems perfectly competent for the Court to take cognizance of a fact which is a matter of record in this Consulate, that fact being that the property stands registered in the firm name, there being no record of its transfer until the 1st March, 1879, when the Deed of Assignment by the firm to Henry M. Olmsted was registered.  There is before this Court, upon which to base its judgment, first, the petition of the plaintiff; second, the answer of the defendants; third, the testimony of Mr. Pim, and documentary proof of the assignment.  Upon these, and the law governing such cases, our judgment is to be based.

   The important questions to be determined are:-

First. - Were the defendants, Olyphant and Company, the owners of the property now held under the attachment previous and up to the date of the Deed of Assignment to Olmsted?

Second. - Did the said assignment effect a lawful transfer of the property in question to the assignees?

   The first of these questions seems to be settled by the testimony of Mr. Pim, which stands undisputed and unquestioned.  The second question involves the consideration of a subject which has received much attention and able discussion in the American Courts, and the conclusions which have been reached have been conflicting.

   The pleadings of the plaintiff have been founded upon the doctrine that the insolvent laws of the State of New York - where the proceedings in insolvency were laid, and where the assignment was made, - have no legal effect beyond the territorial limits of that State, and that therefore the assignment, in pursuance to those laws, did not effect a legal transfer of the defendants' property in this Consular jurisdiction.

   In support of this theory plaintiff had cited Story's Conflict of Laws and Kent's Commentaries, wherein the general principle involved is discussed, and has referred to decisions in American Courts as follows:-

   Booth v. Clark, 17, Howard; Ogden v. Saunders, 12, Wheaton; Harrison v. Sterry, 5, Cranch, and Paine v. Lesser, 422, American Reports; from which he deduces, that an attachment made under the lex rei sitae will prevail, notwithstanding notice of a prior assignment under the insolvent laws of New York.

   The question involved in nearly all of the decisions cited was - whether a discharge in bankruptcy or under the insolvent laws of a State could be pleaded in bar to a suit to recover upon a debt due from the discharged debtor at the date of said discharge to a creditor who was a citizen of another State who had not proved his claim, and therefore had not been a party to the proceedings where the discharge was obtained.  That question is not involved in this case.

   The plaintiff seems to have relied upon the principle of law which obtains in the United States, than an assignment in a Bankruptcy in a Foreign Country does not effect a legal transfer of the property and effects of the bankrupt situate in the United States as against the rights of an attaching creditor there.  The case at bar is not one of a nature to be affected by that principle.

   Insolvent laws are statutory laws of States, and by comity effect is given to such laws of one State by the Courts of a sister State where the lex rei sitae does not intervene to forbid it. - As a general rule personal property follows domicile of the owner, and in the disposition of it, effect is to be given to the laws of his domicile.  The same may be said of immoveable property when the laws of the State were it is locally situate do not establish a contrary rule.  It was held in Rogers v. Allen, 3rd Ohio, 488, that an assignment in one State would convey immoveable property in another State, if not in derogation of the lex rei sitae.  In Louisiana, a voluntary assignment giving preferences executed in the State of New York, where such an instrument was lawful, was held to have taken effect on a vessel then at sea, and an attachment levied on the vessel on its arrival in port in Louisiana was held to be inoperative to defeat the assignee's title.  Southern Bank v. Wood, 13 La. Ann. 554.

   In Vermont the operation of an attachment is prevented by a voluntary foreign assignment, where an actual change of possession has taken place.  Hanford v. Paine, 32 Vermont 442.

   The law of New York is the law of the domicile of the defendants, and the operation of the law is such that creditors may prove their claims and share in the dividends, or, being residents of another State than that in which the contract was made and was to be performed, they may elect not to prove their claims, but seek their remedy in the subsequent acquisitions of the defendant debtors.

   Where an attachment or garnishment has been made according to the local law, rei sitae, before any assignment by the debtor, or by operation of law in envitum, it may well be held that in such a case the attaching creditor is entitled to propriety over the assignee.

   Questions may arise upon the conflict of laws, where an assignment is validly made of personal property in one country by the owner thereof, and the property is at the time of the assignment locally in another country, by whose laws it is liable to be attached by a trustee process or garnishment, and an attachment is actually made by a creditor of the assignor before notice of the assignment.  In such a case, as we have seen (Southern Bank v. Wood), if notice thereof is given before judgment in the suit, the assignee will be entitled to maintain his priority of title.  Story's Conflict of Laws, 399.  The same rule applies as to immoveable property, if there be no law of the country where such property is situated, intervening to prevent it.

   We come now to consider the effect of an assignment in New York, in pursuance of the laws of that State of property locally in China when such an assignment was made.

   The treaty between the United States and China confers upon citizens of the United States residing here, or having property here, extra-territorial rights, and according to section 4 of the Act of Congress approved 11th August, 1848, every citizen of the United States must bear with him the same protection as to his person and property which he would enjoy in his own State under the laws of the United States, which must include Acts of Congress, and Statutory laws of his own State not in conflict with a superior law.  The treat confers judicial functions upon our Ministers and Consuls, as the substitute for the local jurisdiction, which, in each controversy, would control it if it arose in a State of the United States.

   Seeing then that citizens of the United States and their property are not controlled by or subject to the laws of China, and that the jurisdiction exercised by officers of our Government is to be enforced in conformity with the laws of the United States and the common law, one may enquire, of what is this system of law composed?

   This question is answered by a late Attorney-General of the United States, in an elaborate opinion upon the Act of Congress to carry into effect certain provisions of the treaty above mentioned, as follows:-

The laws of the United States comprehending the Constitution, Treaties, Acts of Congress, Equity and Admiralty law, and the law of Nations, public and private, as administered by the Supreme Court and Circuit and District Courts of the United States, together with Decrees and Regulations made from time to time by the Commissioner (U.S. Minister) which shall have the force of law.

   The property under attachment was assigned by the defendants in pursuance of the laws of their domicile, and the writ of attachment was issued in pursuance of a "Decree of Attachment" made and issued by s Commissioner of the United States in China.  The attachment was issued after notice of the assignment.  Which process shall have priority?    I am clearly of the opinion that that which was prior in point of time had priority of right to control the property.

   The assignment had the effect to convey the property of the defendants co instanti, and the registration of the Deed of Assignment in the proper Court of Record in New York is to be regarded as lawful and sufficient notice of the transfer.  Mr. Pim has been in charge of the property here attached since the failure of the firm, representing the assignees.

   The plaintiff in his pleas seems to have attached importance to the fact of his being a British subject, but if account were to be taken of his nationality, he seeks here relief which he could not obtain in an English Court if the defendants had been Englishmen and had made an assignment under the bankrupt or insolvent laws of England, for

"a British creditor will not be permitted to hold property acquired by a judgment under any attachment made in a foreign country after such assignment."

   The Court is asked for judgment against the defendants for the amount of the judgment and costs in the Shanghai Court, namely, Two thousand five hundred and six dollars and eighteen cents, with interest, and costs of this action.  The validity of the judgment obtained at Shanghai is not questioned, and it is therefore the duty of this Court to give such effect to it as lies within its power entered in.

   Judgment is entered in favour of the plaintiff for the sum of Two thousand five hundred and six dollars and eighteen cents, and a further sum of ten dollars and ten cents costs incurred in the Shanghai Court after judgment - together with a sum for interest at the rate of eight per cent per annum from 3rd February, 1879, to date, amounting to two hundred and fifty-six dollars and ninety-five vents; and one-half of the costs of this action.  Execution will be issued.

   The attachment is dismissed, and the remaining one-half of the costs, which have resulted from the attachment proceedings, will be paid by the plain tiff.

M. M. DE LANO, U.S. Consul, Acting Judicially.

Approved THEO F. JONES, D. W. CHANDLER, Associates.

Published by Centre for Comparative Law, History and Governance at Macquarie Law School